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AT&T Allows Advertisers to Sponsor Mobile Data

As growth of new customer subscriptions stalls, AT&T, the No. 2 American wireless carrier, has been trying different avenues to make money.Credit Justin Sullivan/Getty Images

Say you want to watch a trailer for “The Wolf of Wall Street” on your smartphone. Why should you pay for the data required to display it when you are essentially viewing an advertisement?

That’s the idea behind a program that AT&T calls Sponsored Data. Businesses working with AT&T can pay for the data that is used to consume their content or services so that it does not show up on a customer’s phone bill.

AT&T on Monday announced three initial partners working with its Sponsored Data program: Aquto, an ad platform that provides marketers tools to use sponsored data; Kony Solutions, a company that helps businesses develop apps; and UnitedHealth Group, the health care company, which plans to use the program to stream educational videos to people’s mobile devices.

AT&T said that when sponsored content shows up on customers’ phones, a Sponsored Data icon would be displayed to show that the content costs them nothing to watch.

The data sponsorship program is an example of maturation of the mobile ad space. Media companies and advertisers have struggled to find the ideal solution for serving advertisements on mobile products, partly because their smaller screens can make ads too intrusive and annoying. Sponsored mobile data could entice customers to watch ads they might otherwise have avoided because they would have incurred charges on their phone bill.

AT&T, the No. 2 American wireless carrier after Verizon Wireless, is still hugely lucrative. But the growth of new customer subscriptions has significantly slowed as the smartphone market has become saturated. That is why it has been trying different avenues to make money, like Digital Life, a connected home security system, and partnerships with automakers to sell mobile data plans for cars.

AT&T’s sponsored data program has raised concerns among some consumer advocacy groups that say such sponsorships could hurt efforts for net neutrality, the idea that Internet providers should treat all services equally to keep competition fair. Public Knowledge, a nonprofit that focuses on digital rights, said that such a program would allow AT&T to pick winners and losers online by requiring companies to pay so that people can view their content. The group urged the Federal Communications Commission to investigate how data caps are being used to force content creators to pay.

It’s unlikely AT&T will be the only American carrier offering a data sponsorship program. Verizon has been experimenting with a similar program, according to a person briefed on the company’s plans, who was not authorized to speak publicly about the project.